Late-Election Relief: Rev. Proc. 2013-30 and Section 9100

How it works

A missed election is not always fatal. Two relief regimes exist to restore the tax treatment a taxpayer actually intended, avoiding a default classification nobody wanted: a corporation taxed under Subchapter C when everyone meant to run it as an S corporation, a partnership with no basis step-up on a departing partner's interest, or a trader who never made a section 475(f) mark-to-market election. Each track restores the gap between the intended treatment and the default, for every year still open.

The first track is Rev. Proc. 2013-30, and it is the exclusive simplified method for one specific family of elections: a late S corporation election, a late QSub election, a late ESBT or QSST trust election, and an entity-classification election made together with a late S election. There is no private letter ruling and no user fee. The cure is filing the election itself, attached to the entity's return or standalone, along with the statements the revenue procedure requires.

The second track is what practitioners call 9100 relief, after Treasury Regulation 301.9100-1 through 301.9100-3. Its natural home is an election whose due date comes from a regulation, a revenue ruling, a revenue procedure, a notice, or an announcement, using authority Congress gave Treasury under Section 7805(d) to prescribe the time and manner of these elections. It is not confined to those, as the next paragraph sets out, but that is where it does its real work. It splits into an automatic branch that needs no ruling at all, for a specific enumerated list of elections, and a discretionary branch that reaches everything else and does need one.

Which track applies turns on that same regulatory-versus-statutory line, though not in the way it is usually put. 9100 relief reaches both kinds. Under 301.9100-1(b) a regulatory election is one whose due date a regulation, ruling, procedure, notice or announcement sets, and a statutory election is one whose due date the Code sets, and 301.9100-1(c) gives the Commissioner discretion over either. The difference is how far it stretches: a statutory deadline can be extended no more than six months unless the taxpayer is abroad. The S corporation election deadline in Section 1362(b), two months and fifteen days after the start of the tax year the election is to take effect, is exactly that kind of statutory deadline, so six months is the most ordinary 9100 relief could ever buy against it. That is why a late filing there is fixed through Rev. Proc. 2013-30's three-years-and-75-days window instead.

What this is worth in Florida

Florida has no individual income tax, so neither track changes anything at the state level for a Florida resident owner. Whatever a given election restores, splitting profit between wages and distributions, a partnership basis step-up, the treatment a missed section 475(f) mark-to-market election would have carried, the benefit runs to the federal return only. For the S corporation family specifically, there is a state-level fact worth checking before relying on the intended-status gate: I confirm the entity is active on Sunbiz, because an entity that has gone administratively dissolved can undercut the claim that it intended and maintained S status the whole time. Staying active starts with keeping the entity's annual report current. If relief now means the entity is running payroll for an owner-employee where it was not before, Florida reemployment tax registration becomes part of the picture. Whether electing S status makes sense for a given entity in the first place is a separate question from fixing a missed one, and it is the subject of my Florida S-corp guide.

Who this applies to

The two tracks reach different populations, and identifying which one a fact pattern belongs to is most of the analysis.

• The Rev. Proc. 2013-30 population. An entity, or a trust, that intended S corporation, QSub, ESBT, or QSST status as of a specific effective date, and never got the paperwork filed on time: Form 2553 for an S election, Form 8869 for a QSub, or the trust's own statement for an ESBT or QSST. This is common for a new operating company. An entity-classification election filed together with a late S election rides on that same Form 2553 rather than needing its own separate Form 8832, which matters most for an LLC that never affirmatively chose a tax classification before trying to elect S status.
• The 9100 relief population. Anyone who missed a different regulatory election entirely: a multi-member LLC taxed as a partnership that never made a timely Section 754 basis-adjustment election, a trader who never made the Section 475(f) mark-to-market election, a corporation that missed the LIFO inventory election, a homeowners association, or special-use valuation for farm real estate, among others.
• Who neither track reaches. A deadline set directly by statute, for an election outside the family Rev. Proc. 2013-30 covers, generally cannot be extended past six months under 301.9100-1(c). Track 1 also will not fix a defect that has nothing to do with timing: an ineligible shareholder, a partnership or a nonresident alien, for instance, or a second class of stock. Those are not late-filing problems, so a late-filing remedy does not reach them.

What it requires

Each track has its own gate, and the gates do not blend into each other.

The Rev. Proc. 2013-30 gates

All five conditions have to hold at once. Missing any one of them closes off this track.

• Intended status. The entity, trust, or subsidiary actually intended S, ESBT, QSST, or QSub status as of the effective date on the election.
• The late filing is the only defect. Nothing else disqualifies the election: no ineligible shareholder, no second class of stock, no other reason it would fail to qualify.
• Reasonable cause and diligence. There has to be an actual reason the filing was missed, and the entity has to have acted diligently to correct it once the gap was discovered.
• Three years and 75 days. The request has to reach the IRS within three years and 75 days of the intended effective date, measured against a timely deadline of two months and fifteen days after the start of the tax year.
• Shareholder consistency. Every shareholder has to have reported income on every affected return consistent with the election, for the first year and every year since.

The two branches of 9100 relief

9100 relief is not confined to regulatory elections, but it treats them far more generously, because a statutory deadline can be moved six months at the outside. From there it splits in two.

• Automatic, under 301.9100-2. This branch reaches a specific enumerated list of elections carrying a twelve-month window, among them the Section 754 partnership basis adjustment, the Section 472 LIFO inventory method, a homeowners association election under Section 528, and special-use valuation for farm real estate under Section 2032A. A separate six-month automatic extension applies more broadly, to an election whose due date matches the return's, provided that return was filed on time. Neither version needs a ruling request or a fee.
• Discretionary, under 301.9100-3. Every other regulatory election falls here; a late Section 475(f) mark-to-market election is the common example, and it requires a private letter ruling. The taxpayer has to establish, to the Commissioner's satisfaction, that it acted reasonably and in good faith, and that granting relief will not prejudice the government. That showing is made inside the ruling request itself, which carries its own user fee.

What you need to document

The file has to show these things happened. Assertion alone does not carry a request, especially not the discretionary side of 9100 relief.

A reasonable-cause and diligence statement

For Rev. Proc. 2013-30, this has to describe the actual reason the filing was missed and the specific steps taken to correct it once the gap was found, tied to a real cause such as a preparer's error, not a general acknowledgment that a deadline passed.

Consistent, complete returns

Before relying on Rev. Proc. 2013-30, I check every affected return, the entity's and each shareholder's, for consistency with the election, and confirm every Form 1120-S since the intended effective date is filed or on track to be filed. One shareholder who reported as though the election were never made breaks the consistency requirement for the whole group.

Detailed affidavits, for a discretionary 9100 request

From the taxpayer, and from every professional whose advice, or failure to advise, is relevant, each signed under penalties of perjury. A request built on reliance on a preparer needs a record of what was actually told to that preparer, and when, in writing, inside the affidavit.

Evidence the decision predates the outcome

A discretionary request has to show the election would have looked reasonable before anyone knew how the numbers would turn out. Contemporaneous notes, correspondence, or a return position consistent with the intended election help show the request responds to a decision already made, not to a result that only became clear later.

Where it goes wrong

Neither track is aggressive tax planning. Both are IRS-sanctioned relief procedures, and the risk here is denial of the request, not a penalty for having asked.

Where a Rev. Proc. 2013-30 request fails

• Filing after the window closes, without checking the exception first. Three years and 75 days is the general outer limit, but it is not absolute. Rev. Proc. 2013-30 section 5.04 waives it for an entity already treated as a corporation, and that exception carries more conditions than its summary suggests: consistent reporting by the corporation and every shareholder for the first year and all later years, at least six months elapsed since the corporation filed its first Form 1120-S, and no IRS notice questioning S status during that period. The six-month clock is the one that catches people, because it presumes a first-year return already on file. A filer sending delinquent returns in alongside the late election has not started that clock and cannot use the exception. That relief needs no letter ruling. Only outside both the general window and that exception does the path narrow to a private letter ruling under the inadvertent-election relief in Section 1362(f), slower and costlier than anything this track offers.
• A defect that was never about timing. An ineligible shareholder or a second class of stock defeats the sole-defect gate regardless of how strong the reasonable-cause story is.
• Inconsistent reporting by even one shareholder. A single return filed as though the election were never made breaks the consistency requirement for the entire group.
• A thin reasonable-cause statement. A bare acknowledgment that a deadline passed, without a specific cause and a diligence narrative, invites rejection. The statement needs an actual reason, plus the dates and steps of discovery and correction.

Where a discretionary 9100 request fails

• Hindsight. A request built on facts that only look favorable after a later event, a loss year, a sale, is treated as unreasonable on its face. A late Section 475(f) mark-to-market election requested only once a loss year has already shown up is the textbook version of this problem.
• Prejudice to the government. Relief is denied if granting it would leave the taxpayer with a lower aggregate tax liability across every affected year than a timely election would have produced, or if any affected year is already closed by the Section 6501(a) limitations period before the ruling issues.
• A position tied to an accuracy-related penalty. Using relief to change a position that would otherwise draw a Section 6662 penalty is treated as unreasonable by definition.
• Fully informed and simply chose not to elect. A taxpayer who understood the election and its deadline and let it pass anyway does not get a second chance through this route.

The most commonly misused defense on the discretionary side is reliance on a professional. A taxpayer who reasonably relied on a qualified tax professional who failed to make, or advise about, the election is treated as having acted reasonably, unless the taxpayer knew, or should have known, the professional was not competent or lacked the relevant facts. What survives that inquiry is a contemporaneous record: what was actually told to the preparer, and when.

The threshold question comes back at the end, too. Filing a discretionary 301.9100-3 request against a deadline that turns out to be purely statutory is no relief at all, and the fee is spent either way. Before that request goes in, the election's due date has to be confirmed as coming from a regulation or published guidance, not the Code itself.

A situation where this comes up

The version I see most often is a newer entity, an LLC or a small corporation, whose owner told the return preparer at formation that S corporation treatment was wanted from the start, and the election was simply never filed. Nobody notices until a return gets prepared and the missing Form 2553 shows up. Because the window is three years and 75 days rather than a few weeks, the fix is usually still available: the delinquent Forms 1120-S go in alongside the late election, together with the reasonable-cause statement and the shareholder consents the revenue procedure requires.

Contrast that with a fact pattern that never touches the S corporation family, a trader, say, wanting a late Section 475(f) mark-to-market election. Rev. Proc. 2013-30 was never available, and because that election is not on the automatic list, the only door left is a discretionary 301.9100-3 request. That request lives or dies on whether the facts read as reasonable before the outcome was known, and a late mark-to-market election requested only after a loss year shows up is exactly the pattern the hindsight rule exists to catch.

The version that concerns me is the request built entirely on hindsight, where the record only firms up once the numbers make it clear the missed election would have helped. That posture tends to be visible on the face of the file, and it is exactly what the discretionary standard exists to screen out.